AND J.R.R. TOLKIEN SAID, “NEVER LAUGH AT LIVE DRAGONS”

As the Steel-Dragon flies over its 2009 high, it validates our premise that China’s colossal money printing is what truly underlies the world’s economic “recovery” since 2008. Just as it created $30 trillion of Yuan-denominated debt in 7 years, China may have injected upwards of $2 trillion over the past three months.

Putting these numbers in perspective, explains how Chinese steel makers were able to produce in March (first chart), about 80% of annual US production or nearly ten times more than US steel makers over the same month. Yet, as shown on the second chart, the same money that brought steel production to a global record in March, helped fuel its price to $407/ton at the close today. That’s a 48% increase since December.

Oh well, China continues to upend the laws of Supply and Demand, as it’s been doing since 2008, when it discovered the modern central banker’s alchemy: QE Levity!Sound familiar?